Matthew Mullenweg, CEO of WordPress biz Automattic and co-creator of the open source software, says he feels “much lighter” after 159 employees departed in the wake of his controversial attempt to pressure WP Engine to license trademarks the rival has used for years.
As we reported earlier this week, Mullenweg contends WP Engine, which like Automattic hosts WordPress websites, has benefited from the web publishing software without contributing sufficient labor or funds back to the community – obligations not included in the GPLv2 WordPress license, mind you.
Automattic contributes to the development of the software, and Mullenweg reckons it’s unfair WP Engine gets to use that work to make a ton of money a year hosting WordPress blogs without much in return.
Thus Mullenweg tried to get WP Engine, which is backed by venture capital firm Silver Lake, to sign a seven-year Trademark License Agreement [PDF].
Under the proposed terms, WP Engine would pay eight percent of its gross revenue every month to Automattic, or commit developer time worth as much to improve WordPress code, or some combination of these two possibilities. In return, WP Engine gets to use the WordPress trademark and branding in its marketing and operations.
When WP Engine failed to agree – it reckons its use of those trademarks is fair use – public posturing followed, along with cease and desist letters from both organizations to each other. Then Mullenweg blocked WP Engine sites from receiving theme and extension updates via Mullenweg’s WordPress.org. Community blowback followed and Mullenweg briefly suspended the blockade to allow WP Engine to set up an alternative update server.
Finally, on Wednesday, WP Engine filed a federal lawsuit [PDF] against Mullenweg and Automattic. The complaint alleges attempted extortion, libel, interference with contractual relations, computer fraud and abuse, unfair competition, and more.
It also raises questions about the legality of Mullenweg’s handling of the WordPress trademark, donated to the nonprofit WordPress Foundation in 2010 ostensibly to allay concerns about his control over the mark and the potential for abuse. Mullenweg is a director of that foundation, which chiefly oversees the WordPress software project.
“Mullenweg’s public announcement did not mention … that he had also caused the nonprofit WordPress Foundation to grant an exclusive, fully-paid, royalty-free, perpetual, irrevocable, worldwide, sublicensable license and related security agreement to the WordPress mark right back to Mullenweg’s for-profit Automattic,” the complaint says.
In so doing, Mullenweg is alleged to have made false statements in the WordPress Foundation tax filings by reporting that there were no “contracts … between [WordPress Foundation] and any officer, director or trustee … or with an entity in which any such officer, director or trustee had any financial interest.”
Automattic insists the complaint is meritless.
It will be some time before the lawsuit plays out in court, but the impact has already been felt at Automattic and its subsidiary companies.
“Silver Lake and WP Engine’s attacks on me and Automattic, while spurious, have been effective,” said Mullenweg in a post on Thursday. “It became clear a good chunk of my Automattic colleagues disagreed with me and our actions.”
Mullenweg said Automattic designed a buyout package, which he referred to as “an alignment offer,” to give anyone who disagreed with his actions the opportunity to resign by 2000 UTC on Thursday, October 3, 2024, in exchange for “$30,000 or six months of salary, whichever is higher.”
He said that 159 people took the offer, representing 8.4 percent of the company: “By division it impacted our Ecosystem / WordPress areas the most: 79.2 percent of the people who took it were in our Ecosystem businesses, compared to 18.2 percent from Cosmos (our apps like Pocket Casts, Day One, Tumblr, Cloudup). Eighteen people made over 200k/yr! One person started two days before the deadline. Four people took it then changed their minds.”
This incentivized exodus of dissident staff is evidently what Mullenweg meant by opening his post with something Winston Churchill once said: “Never let a good crisis go to waste.” ®
